After an exceptional run in both local and global equity markets, investors could be forgiven for feeling optimistic.
The South African equity market is up an impressive 33% year-to-date to 31 October 2025 – driven largely by the strength in gold and platinum stocks as well as tech giants Naspers and Prosus.
Globally, it’s a similar story, with the MSCI World Index gaining 19.8% in USD year-to-date.
Discover Laurium Capital’s hedge fund options today.
While these results have rewarded investors handsomely, history reminds us that such strong performances are not sustainable indefinitely.
Markets move in cycles, and periods of exuberant returns are often followed by phases of consolidation or correction.
Furthermore, precious metals, a sector notorious for high levels of volatility, comprises 20% of headline indices exposing investors to the risk of steep drawdowns.
That’s why now is the time for investors to think seriously about protecting their well-earned gains.
One of the most effective ways to do this is by including hedge funds in your investment portfolio.
Contrary to the perception that hedge funds are only for volatile times, the truth is that it always makes sense to maintain an allocation to hedge funds.
Their value lies in their ability to:
Hedge funds employ a wide range of strategies – such as long/short equity, market neutral – which can deliver positive returns regardless of whether markets are rising or falling. This helps smooth out portfolio volatility over time.
In challenging markets, hedge fund managers can use risk management tools like short positions, derivatives, and diversification across asset classes to protect capital. This defensive quality is especially valuable after a strong bull run, when valuations are stretched and risks of correction increase.
While hedge funds are often associated with capital preservation, they can also deliver attractive risk-adjusted returns. Skilled managers can identify unique opportunities and generate alpha – returns independent of broader market movements.
Hedge funds tend to exhibit low correlation with traditional asset classes like equities and bonds. This means they can perform differently across market cycles, offering true diversification and reducing overall portfolio risk.
Another key advantage of hedge funds is their wide suitability across different investor profiles.
Hedge funds are not a one-size-fits-all solution – they range from conservative to aggressive in their risk and return characteristics.
This means they can play an important role in low-, medium-, and high-risk portfolios, depending on an investor’s objectives and tolerance for volatility.
At Laurium Capital, we understand that investors have varying goals and risk appetites.
With 17 years of experience managing hedge funds, Laurium has developed three distinct strategies, each with an exceptional long-term track record:
All three funds are Retail Investor Hedge Funds (RIHFs) and are widely available across major investment platforms, making them accessible to a broad range of investors.
With both local and global markets having delivered spectacular gains, it’s prudent to recognize that such performance is rare.
Investors should not expect these returns to continue indefinitely.
As the investment landscape becomes more uncertain – whether due to shifting monetary policies, geopolitical risks, or stretched valuations – the focus should turn to capital preservation and risk management.
Allocating a portion of your portfolio to hedge funds allows you to capture upside potential while mitigating downside risks.
In essence, hedge funds can act as the stabilizer that helps you stay invested through market cycles – safeguarding wealth without giving up the opportunity for continued growth.
In today’s environment, where markets have surged and risks are rising, hedge funds make more sense than ever.
They offer a blend of protection, diversification, and performance potential that traditional portfolios may lack.
Whether the next phase of the market brings continued growth or increased volatility, investors who incorporate hedge funds are better positioned to preserve and grow their capital over the long term.
With Laurium Capital’s 17-year track record and range of hedge fund strategies to suit all investor profiles, South Africans have access to professional, proven solutions that can help protect and compound their wealth through all market conditions.
Discover Laurium Capital’s hedge fund options today.
Article from Business Tech
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